BENEFITS OF FEED IN TARIFFS BY GOING SOLAR
Solar power is energy that can be used by us to power our appliances. Solar power is generated from the sun in the form of electric or thermal energy. Aside from using photovoltaic panels to generate electricity, solar energy is commonly used in thermal applications to heat indoor spaces. Residential and commercial property owners can install solar hot water systems and design their buildings with passive solar heating in mind to fully take advantage of the sun’s energy with solar technology. Getting a solar powered system for your home will not only help drastically cut down your electricity bills by capturing solar energy and converting the sun’s rays into usable electricity through photovoltaic solar panels. Another great incentive to go solar is the possibility of getting paid by tapping in to this renewable source of energy. The government has incentivised solar power not just through rebates but by also providing you with Feed in Tariff for the extra power you generate.
Feed-in tariffs are seen as a very crucial part of promoting renewable energy sources in the early stages of their development. This is especially true when production is often not economically feasible. Feed-in tariffs usually involve long-term agreements and prices tied to the cost of production of the energy in question, in this case solar power. The long-term contracts and guaranteed prices shelter producers from some of the risks inherent in renewable energy production, encouraging investment and development that otherwise might not take place.
Who is eligible for feed in tariffs?
In order to be eligible for a feed in tariff all you need is provide a source of renewable energy like solar power by installing an on grid solar powered system in your home. In order to take advantage of this incentive to use a renewable power source, you do not need to be a commercial energy producer. They can include homeowners, business owners, farmers, and private investors. Broadly speaking, Feed In Tariffs have three basic provisions-
- Feed In Tariffs guarantee grid access which means that solar energy producers will have access to the grid.
- Feed In Tariffs offer long-term contracts, typically in the range of 15 to 25 years.
- Feed in Tariffs offer guaranteed, cost-based purchase prices, which means that energy produced through the solar power systems installed by homeowners is paid for in proportion to the resources and capital expended in order to produce the energy by the retailer they are connected to.
Many electricity retailers across Australia have introduced a feed-in tariff. A feed-in tariff pays you for the excess electricity which is generated by your solar powered system, and not used to power appliances in your home.
The Electricity meter records the excess solar energy generated and based on this calculation the homeowner has a claim over the Feed in Tariff.
Under a net feed-in tariff, a fee is paid to the homeowner for any solar energy that they send back into the grid from their house. So if you are producing more electricity from your solar panels than you are using at any point in time, you get paid for this extra electricity which is sent into the grid.
In order to receive the feed in tariff, the homeowner need to apply with the retailer when getting solar for their house and the retailer needs to connect their solar to the grid (Net metering is carried out by the retailer not the solar provider). When signing an agreement with the electricity retailer, the homeowner needs to be informed about how much they will be paid for every kW/h exported.
The homeowner should always check with their respective electricity retailer about any tariff changes that will occur as a result of installing solar and carefully weigh up the advantages and disadvantages before making any decisions about using this particular electricity retailer. Ask Sunmate solar’s installers about the most solar friendly electricity retailer in your local area and consider changing your electricity retailer to get the best feed-in tariff deal.
Feed-in tariffs are price-based support instruments and so is net metering. There is a criteria in order to be eligible for receiving the feed in tariff. In order to qualify for being labelled a feed-in tariff, the “support instrument” in place should consist of at least one of the following design options:an obligation of purchase, and a stable tariff payment which is guaranteed over a long period of time. First, the purchase obligation obliges the connected grid operator to buy all the renewable electricity – independent of electricity demand. Second, the renewable power producer, in this case the homeowner, is guaranteed a certain amount of money per unit of electricity that is produced. Third, this payment is committed over a long period of time (usually 15 to 20 years), which increases investment security and allows for cost amortisation.
Feed-in tariffs and net metering are two different mechanisms and incentives for going solar. One should not be confused for the other. Net metering is another price-based support instrument and is a concept mostly applied for the promotion of decentralised solar electricity in many parts of Australia. Under this support scheme, independent power producers have the right to get connected to the grid and the local utility is obligated to purchase all excess electricity. This means that all electricity that is not needed for local consumption has to be bought by the electricity retailer.
The name of the support instrument refers to the meter measuring the electricity consumption. In the case of most net metering schemes, the meter starts turning ‘backwards’ once excess electricity is fed into the grid. In other words, for each unit of electricity delivered to the grid the renewable power producer ‘receives’ the equivalent of the retail electricity price. However, this electricity price for final consumers is not fixed and not guaranteed over a long period of time. Therefore, a net metering mechanism lacks two important components of a feed-in tariff and therefore offers a lower degree of investment security.
Feed-in tariffs should also not be mistaken with so-called preferential tariffs, as they are paid in some Indian provinces and other parts of the world. In the case of a preferential tariff, the remuneration level is fixed by the legislator. However, in contrast to a feed-in tariff mechanism, the tariff level is not guaranteed for a long period of time. Instead, the legislator can change the remuneration level on an annual basis. Therefore, one of the essential components of a feed-in tariff is missing.
Today, feed-in tariffs – as defined above – are applied in a large number of countries, regions, or provinces, including Africa, the Americas, Asia, Australasia and Europe.
So why are feed-in tariffs so fabulous? First, they have proven to be the most successful support instrument for renewable electricity. Second, feed-in tariffs can be designed flexibly according to the framework conditions of the national electricity markets and according to the specific national energy policy objectives. They can be designed in order to include an increasing share of renewable electricity and according to the needs of developing countries and emerging economies. Third, feed-in tariffs have helped to create national markets for the manufacturing industry, thus leading to a number of secondary macro-economic benefits such as job creation. Finally, they have also helped to ‘democratise’ energy markets by allowing a large number of actors to participate in the power generation business, including small and medium size companies, farmers and private persons.
Interested in benefiting from solar power? Solar panels are installed at three main scales: residential, commercial, and utility. Residential-scale solar is typically installed on rooftops of homes or in open land (ground-mounted) and is generally between 5 and 20 kilowatts (kW), depending on the size of a property. Commercial solar energy projects are generally installed at a greater scale than residential solar. Though individual installations can vary greatly in size, commercial-scale solar serves a consistent purpose: to provide on-site solar power to businesses and non-profits. Finally, utility-scale solar projects are typically large, several megawatt (MW) installations that provide solar energy to a large number of utility customers.
For some solar shoppers who may not be able to install solar on their property, community solar is a viable solar option that more directly connects utility-scale solar energy projects to residential consumers. As such, community solar farms are typically built in a central location as opposed to on any single customer’s property. Residential consumers can subscribe to a community solar project to receive many of the benefits of solar power without installing solar panels on their property.